Hawai’i Eliminates its TANF Asset Test

In February, we reported that Hawai’i was on the verge of eliminating its TANF asset test. Yesterday, Governor Neil Abercrombie signed the bill, HB 868, and made it official.

Hawai’i now joins six other states—Virginia, Ohio, Maryland, Alabama, Louisiana and Colorado—that have lifted their TANF asset limits in recent years. As we described in our policy paper last year, eliminating asset tests for both TANF and SNAP (formerly known as food stamps) has been found to reduce paperwork and increase administrative efficiency. In Colorado, for example, the state agency estimated that eliminating the TANF asset test could save caseworkers 15 minutes per case interaction—or up to 90 minutes for the five or six interactions that typically occur between a client and a caseworker in the first 45 days. These savings add up.

Moreover, eliminating asset tests supports the ultimate goal of the TANF program—helping low-income families move toward self-sufficiency. A small savings cushion can make all the difference in helping a family cope with an unexpected expense such as a car or home repair. Without this buffer, families are more likely to turn to expensive credit options or payday lenders, which can trigger a debt treadmill that becomes increasingly difficult to escape. Our safety net should allow families to build savings that will help them move out of poverty, rather than require them to live in a perpetual state of economic vulnerability.

There are signs that asset limit reform is becoming increasingly popular, particularly in the TANF program. A bill to eliminate the TANF asset test in Illinois recently moved out of committee in the state legislature. Last year, fewer than 1 in 6000 TANF cases in Illinois were closed because of excess assets, but administering the test is time and labor intensive. In California, a bill is moving through the legislature to allow TANF households to own one vehicle, as is currently permitted in thirty-eight other states. Given the clear links between access to a vehicle and employment, this is a common sense measure that will enable more Californians to find jobs and move off of public assistance for good.

Hawai’i is to be commended for taking this step to support its low-income families’ financial security. Let’s hope that more states follow in their footsteps.